Home sales in Columbia surged again in June and in much of South Carolina, putting the state on course for its best year since the housing bust.
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Sales are being driven by a changing market, including a jump in interest rates and increases in home prices. Until recent weeks, rates on a 30-year mortgage had stayed below 4 percent all year. While still historically low, rates have risen over the past few weeks, and buyers are jumping to make a purchase before rates and prices go higher, experts said.
“Buyers that have been delaying a decision seem to be coming back into the market now making a decision,” said Fred Richert, Russell & Jeffcoat branch manager in their Northeast office at I-20 and Two Notch Road. “With (interest) rates starting to creep up a little bit, the buyers now feel now is the time to buy.”
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Sales increased 26 percent to 912 units sold in Columbia last month and by 14 percent to 5,952 units sold statewide, according to a monthly report released Monday by the S.C. Realtors trade group.
Through the midpoint of the year, sales were up 24 percent to 4,504 units in Columbia and 19 percent to 30,351 in South Carolina —the best sales numbers in five years, exceeding even sales in 2010 when an $8,000 first-time home buyers tax credit drove sales up.
“Comparing year-to-date numbers, we’re well ahead of last year’s results. Everything looks like it’s upbeat,” Richert said. “We have a good representation of new homes products as well as resales, and we’re seeing a good bit of increase over last year.”
Builders are becoming more active in new home construction, Richert said, creating inventory for sales people while existing home sales also are ahead of last year.
Potential buyers obviously want to make a purchase before rates go higher, but home values are “inching up” as well, Richert said.
The median price of homes sold in the Columbia area in June increased nearly 2 percent to $150,000 and more than 4 percent statewide to $164,900, according to the Realtors report.
The summer also is poised for a strong finish, with pending sales up 39 percent to 978 in June in the Columbia market, according to the report. Pending sales are sales in which contracts have been signed but the deal has not closed. Those sales should close in the coming months.
Inventory levels also sunk to 9.5 months from 10 months in May, moving the market toward balance. A balanced market has about six months of inventory, experts say.
“Things are definitely getting better,” said Karen Yip, a 10-year real estate sales veteran in the Columbia area.
But last week’s 45 percent increase in mortgage interest rates to 4.5 percent was a shocker, Yip said, that came suddenly with far-reaching impacts.
A buyer in the market, for instance, who was seeking to purchase a $150,000 home when mortgage interest rates were 3.3 percent for a conventional 30-year loan, may only be able to afford a $130,000 home with rates at 4.5 percent, Yip said. Some potential home buyers in the mortgage-securing process who had not locked in rates with their lender at the time of the rate change were caught off guard by the recent rate hike, she said.
“For the first-time home buyer, that’s quite a difference in the type of home you can afford,” Yip explained. “Nobody would have expected such a quick increase in such a short amount of time, and quite frankly, I think it’s got buyers worried.”
Yip, formerly of Re/Max Real Estate Services, who opened her own real estate brokerage business in March, Yip Premier Real Estate, said 2013 has been strong so far.
Business is up 20 to 25 percent this year, she said, and sales for colleagues in some larger firms is up 30 to 40 percent. The recent rate hike motivated a spurt of activity in the home buying market “as people realize it’s not going to ever be 3.3 percent again unless something unexpected happens,” Yip said.